It’s unlikely that your plans for Valentine’s Day include a phone call to your insurance agent. But if you’re gifting a pricey piece of jewelry this month, you may want to pencil one in.
Standard homeowners (and renters) insurance covers belongings from fire and other perils named in a policy, but there are limits as to how much money a policyholder can collect on a single piece of jewelry that has been stolen, said Chris Wukovits, Agency Manager for AAA New York Insurance Services, Inc. In most policies, this limit, known as a “limit of liability,” on jewelry is in the ballpark of $1,000, well short of the price of most engagement rings, Wukovits said.
“People spend three, four, months’ salary on engagement rings and that makes it an asset that the buyer should want to protect,” he added.
Buyers looking to insure a piece of jewelry that exceeds the liability limit in their policy have two options, said Loretta L. Worters, vice president of communications for the Insurance Information Institute.
She said they can either ask their insurance agent to increase their limit or they can have the agent “schedule” an individual piece of jewelry into their coverage by purchasing what’s called a “floater” policy.
“Scheduling each piece or item may cost more in premiums, but it offers broader protection, because the floater covers losses of any type, including accidental losses—such as dropping your ring down the drain of the kitchen sink or leaving an expensive watch in a hotel room—that your homeowners insurance policy will not cover,” Worters said.
Floater policies by default are replacement cost policies, meaning the insurer will replace a piece of jewelry with an item of like kind and quality if ever it is lost, stolen or damaged, Wukovits said.
Another benefit of the floater policy is that there is typically no deductible for a jewelry claim, he added.
Even if an engagement is not in your plans, you may still want to consider a floater on another high value item you own, Wukovits said.
Floaters can be purchased on musical instruments, sports memorabilia collections, high ticket electronics and even family heirlooms, he added. But first, said items must be appraised, or a receipt dated within the past three years must be provided to the insurance agent, so the insurer knows what the item or items are worth, Wukovits said.
Wukovits also recommends keeping an up-to-date, room-by-room home inventory, which you can catalog in a notebook or using a video camera. Either way you decide to do it, you want to document what you own and how much each item costs, he said. Not only will this help you speed up claims and prove losses for your taxes, but it will also give you an idea of how much insurance you need, he added.
Click here to find more information on floater policies or to get a quote from AAA Insurance.
This post was originally published in 2018 and has been updated.